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Pelatro PLC on Thursday said annual earnings before interest, tax, depreciation and amortisation will fall below market expectation, after currency fluctuations and rising interest rates hurt revenue.
The London-based marketing software specialist said ‘a significant portion’ of its revenue is denominated in Indian rupees rather than dollars, meaning it is exposed to currency fluctuations on revenue as well as costs.
It said ‘the continuing weakening of INR [versus] USD is therefore expected to result in a shortfall against management expectations for INR-denominated revenue on translation to USD.’
Pelatro added that rising interest rates have also ‘negatively impacted’ the present value of some contracts under the group’s revenue recognition policy. Certain other income which was expected to be recognised this year will now be recognised in the first quarter of 2023.
The overall hit is likely to be around $700,000 to $800,000, the company said.
Currency movements also will be reflected in costs and so the impact on profitability will be ‘less marked’, Pelatro said. However, it is still expected to result in Ebitda for the year ‘falling slightly below current market expectations’.
Pelatro said it has won a number of recurring revenue contracts in the year. However, some customers said they may wish to transfer to a licence model due to ‘changing economic conditions’. Although the payment structure is similar, the revenue for a licence will be recognised in the year of agreement.
This means Pelatro is likely to close the year with just under $6 million in annual recurring revenue.
Shares in Pelatro were trading 31% lower at 13.71 pence each in London on Thursday morning.
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